Time - Germany has consistently been the strongest advocate of restructuring and austerity as the key to solving Europe’s financial problems. But one by one, Germany’s economic allies are running into political resistance to those policies. The collapse of the Dutch government has made it difficult for that country to meet its budget targets. And in France, Socialist François Hollande has won the presidential election. He has been calling for more progrowth policies, which has provoked consternation in Germany. But the balance in Europe has shifted, and Germany may have no choice but to go along with more spending — and more borrowing — by national governments. In the short run, that would help Europe’s economies by reducing unemployment and limiting the severity of any recessions. But additional borrowing will also contribute to the debt load that governments have to carry.
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